As a CPA or CGMA, you excel at getting into the weeds. Whether it’s a reporting discrepancy or buried tax provision, you will find it. More importantly, you know how to arrange those weeds to form a bouquet that helps your client.
Now, with software spouting numbers on everything from revenue and sales to “likes” and clicks, a new business opportunity is opening up, one that lets you use that great analytical mind to serve clients who desperately need help with getting a grip on all that data.
“CPAs are ideally positioned to be able to step in and do that type of work.” said Dan Griffiths, CPA, Strategy and Leadership partner at Tanner LLC. Griffiths ought to know. In addition to Tanner’s tax and audit practices, the firm has stretched its accounting arms to carry a range of specialty consulting services such as strategic planning, cybersecurity and, now, data analytics.
The diversification paid off – not only in creating new revenue sources but also in company culture and reputation.
To Griffiths, standing still means getting left behind – and he has a point. The World Economic Forum’s Jobs Report lists traditional accountant and auditor roles as being made increasingly redundant by automation, while dozens of new roles will emerge. Branching out now will pay dividends later. In our interview, Griffiths shares the ups and downs about venturing into new services and offers insights for firms of all sizes who want to dip their toes into the world known as Big Data.
Jennifer Gardner: It’s mind boggling to think that by 2022, half of the companies surveyed by the World Economic Forum expect machines to replace some of their full-time workforce. How has technology impacted your work? You’re on the forefront for some of this change.
Dan Griffiths: We’ve gotten pretty involved, we’ve even gotten “bleeding edge” on some of it. We figure we kind of have to if the change is going to happen as fast as it’s likely to happen.
A key part of that preparation is experimenting and being willing to risk duplication. “I had someone in my office this morning…talking about how to leverage technology in our audit processes. He said, ‘I hate to do all this work if someone is just going to create a tool in six months that makes all this work irrelevant.’”
While that could happen, he noted, “we need to think through all these processes and implications that technologies are likely to have on our processes or we aren’t going to recognize the tool when it comes. Also, we are going to be ill-prepared to fit it to our needs because we haven’t defined business requirements on our side.”
For example, Tanner is working with a company that has a data extraction tool that allows information to be taken out of any general ledger accounting system “almost without any effort on the part of the client” and put in a standard format. The challenge is that “when you work with a software company, they have no understanding of our business – they don’t know how an audit works, don’t know what a confirmation is. They [simply] know a lot about data analytics.”
JG: Is there a critical need for the profession to bring knowledge to software developers?
DG: We either need CPAs to become developers – which is probably not a very realistic pathway – or CPAs need to learn enough about the underlying technologies and their application to translate the requirements the developers can code for.
One of the biggest benefits of bringing a cybersecurity practice was not the incremental revenue. . .but bringing the people with different skillsets into the firm to help us get better. They can apply that [technical] knowledge to our process and audit workflows and say why are you guys doing this? [For example, they identified ways] to cut four hours out of every audit. If we’re doing 500 audits, that’s a lot of hours…We would never have gotten there on our own if we didn’t have people here at the firm with those skillsets.
JG: Companies have huge amounts of data, but most companies don’t really know how to leverage that data yet. It seems an accountant, a CFO, a strategic business partner or analyst would have a huge value-add to help these companies use the data they’ve collected.
DG: We’ve been very successful in helping clients ask and answer questions that may sound pretty basic. Tools like Shopify, QuickBooks, Facebook Ads and even the WordPress backend of a website can all provide valuable information, but putting it together to see the big picture is where businesses often need help. If I’m an ecommerce company, how do I answer the question, what’s my CPA? That’s marketing speak for cost per acquisition.
Marketing companies dabble in this, but CPAs are ideally positioned to be able to step in and do that type of work – as long as we’re supported by people who know how technology works.
JG: Not everybody is on the bleeding edge [of technology]. Let’s say I’m a small or mid-sized firm. It probably feels a little overwhelming. How do I start a data analytics practice?
DG: For each firm, you have to evaluate where you’re going to find your early wins. One for us was cybersecurity. There’s not a business client of any firm that isn’t thinking about information security or hasn’t been hacked or been afraid of being hacked. That to me is a really easy way to bring tech savvy into the firm.
Another win for Tanner was that adding data analytics services covers a pretty wide range; part of it is rearview mirror information. “Do we know how much money we made last month? Do we know what our gross margin percentages were by product line, historically speaking? Then how do we take that information to predict what will happen in the future or tell us what to do differently next time.”
JG: I think that would be a huge value to the client. Everyone needs to know how much money they’re making.
DG: They not only want to know [that]– but they also want to know, “How can I make more money? If I start doing more Facebook ads, will I make more money, or will I start losing money?”
What we found interesting as we have been able to take our understanding of data analytics and apply it internally, this is a case of the cobbler’s children not having shoes. We’re horrible, horrible at tracking and managing our own data. No one knows what their profit margins are. We can’t agree on how they will define what profit is. We could do a better job of using data to guide our decisions as a firm as opposed to gut feels. We’re in the middle of an ERP implementation to make sure we’re drinking our own data analytics Kool-Aid.
JG: It sounds like it’s been a value add. It’s just a matter of getting people more comfortable with data analytics as part of the future of profession. I think the barrier to entry feels big to them.
DG: It shouldn’t be. We found you can hire someone at $80,000 or $100,000 and just start there. Their skillset is going to just multiply with what you’re able to do at the firm. Just find one opportunity. For instance, we’ve got clients asking for dashboards. Why don’t we hire someone with that specific expertise and turn ‘em loose to help solve those client problems? We don’t need to make a ton of money upfront, we just need to learn. And then we can refine it from there. We need to learn from Silicon Valley and be willing to do things that don’t scale. That’s the only way that we’ll succeed in innovating things that will scale. You can generally cover your costs, but your initial investments are not about making a bunch of money, they’re about learning what has the potential to do that.
Unless we’re willing to experiment, we’re just going to sit around waiting for someone to come out with QuickBooks and a ProAdvisor certification program and everything else. We’re waiting too long. We’ll miss the opportunity.
JG: So, if I want to get started in data analytics, I need to have some baseline knowledge. How much do you need to understand to get your feet wet?
DG: I think it’s important for leaders of the firm to understand relational databases and some basics of how big data actually works. Just a baseline understanding of those concepts would be really helpful. Then you at least understand what’s possible with the tools even if you’re not the person who can go in and push all the buttons to make it happen.
3 key takeaways from Dan Griffiths to help you get started with data analytics in your firm:
Starting with Low-Hanging Fruit
A good way to think about dipping a toe in the water is finding something that self-funds. If we added this service offering, how many existing clients can we sell it to pay for itself? That opens up the possibility of having people in the firm with different skill sets. It’s not about trying to boil the ocean by hiring $500,000-a-year data scientists.
Embracing Trial and Error
It’s important we spend some time going down some of these dead-end pathways. That’s how we’re going to learn.
Keeping it Real
We’re not whizbang data analytics people… We’re just helping companies have a little bit better business intelligence.
Intrigued by Dan’s comments? Check out these resources to leverage new opportunities for your firm. Also, learn more about the types of skills to either develop in your practice or acquire through new staff from this excerpt of the Journal of Accountancy annual technology roundtable.